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Senior Alert
Canadian Charged for Defrauding Elderly with Lottery
Scam
Many seniors citizens also called despite being on
National Do Not Call Registry
Nov. 1, 2005 - The Federal Trade Commission has
charged the operator of a Vancouver, Canada-based telemarketing
operation with targeting elderly U.S. consumers in connection with
offering nonexistent foreign bonds and supposed cash prizes in a lottery
scam. He is also charged with violating the National Do Not Call
Registry. The FTC has also posted a warning on their Website about
foreign lotteries.
According to the FTC, the defendant, John Raymond
Salvator Bezeredi, falsely promised consumers that after buying the
bonds, they would be entered into monthly drawings and that they were
very likely to receive substantial cash winnings or receive regular cash
payments.
Few, if any, consumers ever received such payments
after buying the “bonds,” leading the Commission to charge Bezeredi with
violating the FTC Act and the Telemarketing Sales Rule (TSR).
He also has been charged with illegally calling
consumers on the National Do Not Call Registry maintained by the FTC and
the Federal Communications Commission.
The complaint was filed against Bezeredi,
individually and doing business as Dominion Investments, Eurobond
Fidelity Ltd., and Imperial Investments – the names under which the
bonds were marketed. On October 17, a federal district court in Seattle
issued a temporary restraining order barring the defendant’s allegedly
illegal conduct, pending the resolution of the Commission’s complaint.
Along with the FTC’s complaint, a simultaneous
civil action against the defendant was filed in British Columbia,
Canada. In addition, Bezeredi was arrested on October 21, 2005, in
Vancouver, B.C., pursuant to criminal charges filed by the U.S.
Attorney’s Office for the Central District of California. Bail was set
at $1 million (CDN).
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FTC Warning on
Foreign Lottery Scams |
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As part of its educational outreach, the
FTC has a consumer alert on international lottery scams,
available at
http://www.ftc.gov/bcp/conline/pubs/alerts/intlalrt.htm,
which has these words of caution for consumers who are thinking
about responding to a foreign lottery:
● If you play a foreign lottery – through
the mail or over the telephone – you are violating federal law.
● There are no secret systems for winning
foreign lotteries. Your chances of winning more than the cost of
your tickets are slim to none.
● If you purchase one foreign lottery
ticket, expect many more bogus offers for lottery or investment
“opportunities.” Your name will be placed on “sucker lists” that
fraudulent telemarketers buy and sell.
● Keep your credit card and bank account
numbers to yourself. Scam artists often ask for them during an
unsolicited sales pitch. |
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Bezeredi’s Alleged Business Practices
The FTC contends that Bezeredi, through his
Canadian telemarketing operation, contacted mostly elderly U.S.
consumers, offering them the chance to invest in European bonds
involving monthly cash prize drawings.
Telemarketers allegedly told consumers they were
highly likely to receive regular cash winnings of at least 50 dollars if
they bought the bonds over the phone. At times, telemarketers called
consumers more than once in an attempt to persuade them to send multiple
payments for additional bonds.
Consumers who bought the defendant’s “bonds”
received a variety of documents on letterhead bearing a Hungarian
address. The documents included a cover letter congratulating them for
participating in the bond program and explaining the “value” of their
membership program.
Consumers also received an information sheet
stating that their bond purchase is registered with the “European
Central Union Bank. Unfortunately, for the consumers who bought the
“bonds,” there is no “European Central Union Bank,” and the European
Central Bank, which sets monetary policy in the 12 European countries
that use the Euro as legal tender, does not operate a prize bond
program.
According to the FTC, consumers paid Bezeredi
between $400 and $5,950 each to buy the foreign “bonds” his
telemarketers were pitching. Most consumers who sent money received
nothing of value in return.
The Commission’s Complaint
According to the Commission’s complaint, Bezeredi
violated both Section 5 of the FTC Act and the TSR by telemarketing
foreign bonds to U.S. consumers.
Specifically, Bezeredi allegedly misrepresented
that consumers who buy from, or pay fees to, Dominion, Eurobond, or
Imperial would receive regular cash payments, would be entered into
monthly drawings to win cash or prizes, or likely would receive cash
winnings.
Further, the FTC charged that Bezeredi failed to
disclose to consumers that importing and trafficking in foreign
lotteries is a crime in the United States, and that the bond scheme he
was pitching constitutes such a lottery.
Finally, the complaint charged the defendant with
violating the Do Not Call provisions of the TSR by calling, or causing
other people to call, numbers on the National Do Not Call Registry, as
well as by failing to pay the required fees for access to telephone
numbers in the area codes he and his telemarketers called.
The Commission vote authorizing the staff to file
the complaint was 4-0. The
complaint was filed under seal in the U.S. District Court for the
Western District of Washington at Seattle on October 17, 2005, and the
judge issued a temporary restraining order against the defendant the
same day. The seal was lifted on October 21, 2005. In filing the
complaint, the FTC is seeking injunctive and equitable relief, including
restitution and a permanent injunction prohibiting the defendant from
violating the FTC Act and the TSR in the future.
The investigation leading to the complaint in this
matter was coordinated with the British Columbia Telemarketing Task
Force, known as “Project Emptor.” In addition to the FTC, other agencies
participating in Project Emptor include the Royal Canadian Mounted
Police, the British Columbia Business Practices and Consumer Protection
Authority, the Canadian Competition Bureau, the FBI, the U.S. Attorney’s
Office for the Central District of California, and the U.S. Postal
Inspection Service.
NOTE: The Commission authorizes the filing of a
complaint when it has “reason to believe” that the law has or is being
violated, and it appears to the Commission that a proceeding is in the
public interest. A complaint is not a finding or ruling that the
defendants have actually violated the law.
Copies of the Commission’s complaint are available
from the FTC’s Web site at
http://www.ftc.gov and also from the FTC’s Consumer Response Center,
Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC
works for the consumer to prevent fraudulent, deceptive and unfair
business practices in the marketplace and to provide information to help
consumers spot, stop and avoid them. To file a complaint, or to get free
information on any of 150 consumer topics, call toll-free,
1-877-FTC-HELP (1-877-382-4357), or use the complaint form at
http://www.ftc.gov. The FTC enters Internet, telemarketing, identity
theft and other fraud-related complaints into Consumer Sentinel, a
secure, online database available to hundreds of civil and criminal law
enforcement agencies in the U.S. and abroad.
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